As April looms, it’s possible we’ll see a modest uptick in mortgage rates, largely due to anticipated tariff increases on imports. This potential shift has businesses and consumers alike on edge, as they navigate the economic implications.
Predicting mortgage rates is no easy task, and April presents a particularly unpredictable landscape, primarily because of the ongoing tariff uncertainty. Kara Ng, a senior economist at Zillow, aptly captures the dilemma: “With tariffs capable of both sparking inflation and hampering economic growth, forecasting mortgage rates has become especially challenging.”
The Trump administration, as of late March, was gearing up to levy higher tariffs starting April 2. However, details like which countries and which products will be affected remain unclear, leaving individuals pondering major financial decisions—like buying a home or locking in a mortgage rate—without complete information.
One thing is certain: If these tariffs come into play, they will eventually lead to higher prices for U.S. businesses and consumers. Federal Reserve Chair Jerome Powell highlighted that all forecasts for 2025 already factor in what he termed “tariff inflation.”
Economists at Fitch Ratings have been more straightforward, describing the situation as a “global trade war” initiated by the U.S., which they predict will dampen both domestic and international growth, driving up U.S. inflation and delaying potential Federal Reserve rate cuts.
The link between inflation and mortgage rates is undeniable. According to a Fitch commentary on March 18, this “tariff shock” could elevate the inflation rate by a full percentage point, returning us to levels last seen in September 2023.
The Federal Reserve aims to stabilize the inflation rate at 2%, using the core Personal Consumption Expenditures Price Index. The rate peaked at 5.6% two-and-a-half years ago and has been on a downward trajectory ever since, reaching 2.8% recently and possibly inching down to 2.7% in March.
Mortgage rates naturally tend to follow inflation trends. In September 2023, the average rate for a 30-year mortgage was at 7.2%, as per Freddie Mac, and had fallen to 6.65% by March 2025. If tariffs lead to increased inflation, mortgage rates might climb again as well.
Despite concerns, if tariff-induced inflation does cause mortgage rates to rise, any increase might not be immediate. That’s largely why this prediction is approached cautiously. Moreover, the effect of tariffs may already be reflected in the current mortgage rates, given that lenders have been aware of impending tariffs for some time. Chen Zhao, Redfin’s head of economics, mentions, “It’s been baked into mortgage rates for months now.”
Should the current administration expand tariffs beyond expectations, mortgage rates could indeed increase. Conversely, if many nations or products are exempted, Zhao posits rates might even drop slightly.
Heading into the spring and summer homebuying season, it would be ideal if rates were lower and economic policies were predictable. Currently, mortgage rates hover around 6.5%, with policy changes in flux. The smart move is to make property decisions based on personal readiness rather than trying to outguess market movements. Ng advises home buyers to stay alert for fleeting opportunities of low mortgage rates rather than holding out for a substantial dip.
Various predictions from other forecasters suggest the 30-year mortgage rate, which averaged 6.8% in early 2025, might decrease below 6.5% by early 2026, as anticipated by the Mortgage Bankers Association and Fannie Mae, the latter foreseeing a steeper decline than its counterpart.
Regarding what I anticipated for March, I had expected mortgage rates to remain stable for most of the month, possibly rising post-March 19, following the Federal Reserve’s meeting. However, this didn’t unfold as predicted. Instead, mortgage rates fluctuated, ultimately landing lower in March compared to February.
